Mariana Mazzucato is still making her pitch for government to gain more of the revenues from innovation. Not hugely and massively surprising of course, she was funded by the EU and developed the plan by which the EU is going to take a chunk of the revenue from the innovation they fund. But it's still true that she's missing the point.
Breakthrough technologies, such as the internet and biotech, did not emerge from governments worried about “commercialization”; they emerged from the spillovers of investments that were focused on long-run public missions. Missions of the past, such as getting a man to the moon, translated into multiple homework problems that needed different actors to work together in dynamic partnerships, spurring innovation. Today’s societal challenges, from aging to climate change, can provide a similar focus and animating force. They can stimulate innovation and give direction for new private investment and entrepreneurial activity as profit-making opportunities come into sight. Mission-oriented thinking could also be used to develop technology roadmaps for the 17 sustainable development goals.
We are talking there of public goods of course. The reason that the private sector doesn't do this basic work is because the results are non-excludable and non-rivalrous. Therefore it's almost impossible for a private actor to appropriate the revenues from the work done to offset the expenses. This is the entire argument for there being any form of public expenditure in this area.
Tax payers should cough up because otherwise these things won't get done. Yes, sure, we are a little wary of stating that this argument is true but let us just, arguendo, assume that it is.
The solution therefore is as follows, according to Mazzucato:
Fourth, risks and rewards. The wrong narrative about who the risk takers are has led to a distribution of rewards that does not reflect the true distribution of risk. If taxpayers are taking the biggest risks during the uncertain early stages of the innovation process, they should share in the rewards. The question is how best to do this. There are many options, including agreements on the reinvestment of profits (exactly the kind of deal that led to the creation of Bell Labs); capping prices of publicly funded products (e.g., drugs); retaining a golden share of the intellectual property rights; retention of equity or royalties when feasible; and income-contingent loans. There is no one solution, but consideration of different ways through which rewards from innovation can be better shared is central to a strategy that targets not only smart growth but also inclusive growth.
But we've just said that the reason for public sector involvement is because we cannot appropriate the rewards. Thus stating that the public sector should appropriate some share of the rewards that cannot be appropriated isn't going to work, is it?
Mazzucato's argument doesn't even work on its own terms, let alone any other.